LINK Mobility Group Holding ASA (LINK) Earnings Call Transcript & Summary

Good morning, and welcome to the Fourth Quarter 2024 Financial Results Presentation for LINK Mobility. My name is Morten Edvardsen, CFO and Head of Investor Relations. And this morning, I am joined by Thomas Berge, CEO. And together, we will present the results. After the presentation, there will be a Q&A session. Please post questions online during and after the presentation. Thomas, the word is yours.

Thank you, Morten. The fourth quarter of 2024 is another great quarter, concluding a strong year with 10% gross profit growth and 13% adjusted EBITDA growth. LINK is the leading and largest CPaaS player in Europe. We started out more than 20 years ago in the Nordics and have been part of building the messaging market in the Nordics to one of the most advanced messaging markets in the world. LINK is using this experience to fuel the development in the less penetrated markets in Europe. Our strategy is dedicated to providing digital communication products to the enterprise market for them to interact with their end customers. We approach the enterprise market through a strategy of local touch points with our clients. We have numerous sales reps, customer service and customer success employees on the ground winning new contracts and supporting existing clients in local language and culture. This setup is creating a larger reach than many of our competitors who have a more regional or centralized approach to the market. LINK's more than 50,000 clients serviced by our 30 offices in 18 countries are a result of the successful implementation of this strategy over many years. Group revenue during the last 12 months was recorded at NOK 7 billion. LINK has grown significantly over the last years with a revenue CAGR of 19%. Profitability has always been a key priority. LINK is growing the business while generating consistent profitability growth with a CAGR of 16% in the last 4 years. For 2024, adjusted EBITDA is reported at NOK 718 million or a growth of NOK 105 million or 17% LINK has a central position in the industry value chain, supporting clients with connectivity and SaaS solution to enable clients to communicate with their end users. Enterprises have a constant need to communicate and inform their end users. The enterprises are increasingly choosing the mobile phone as the communication channel towards their end users. This megatrend is being driven by the end users. We prefer that enterprises communicate with us over the mobile phone and the enterprises are just adapting. LINK has the connectivity to the mobile operators and the relevant OTT channels, which is combined with our software solutions to provide our enterprise clients with an end-to-end communication solution towards their end users. Those software solutions include chatbots combined with AI, marketing automation, CDP, payment solution and template builders and managers, just to mention some. LINK software solutions, combined with the connectivity enables a state-of-the-art multichannel and conversational communication platform, ensuring satisfied end users and high return on investments for our clients. LINK is operating in a growing market. There are 2 main growth engines in our industry. Firstly, more and more enterprises are using digital communication solutions, and they are utilizing it in more and more areas. This significant upside is documented by differences in penetration rates per country. The Nordics are the most penetrated regions with the rest of Europe lagging 250 messages per citizen per year behind the Nordics. This is 134% gap or a growth potential as we see it. Successfully introducing new use cases to market will result in a higher growth momentum as the penetration rates are increasing. LINK has an excellent position to extract this growth with our local approach. We have people on the ground to explain and motivate enterprises to adopt new ways of communicating digitally, learning from our experience in the more advanced Nordic region. Secondly, new channels like RCS and WhatsApp are opening up for new ways of engaging with end users through initiating conversations with the support of AI-driven bots. We already see these more advanced products yielding significantly higher value for our customers, enabling us to charge a premium for those services. Before presenting the Q4 results, I would like to summarize the strong year of 2024. LINK performed in the high end of expectations with a 10% gross profit growth and 13% adjusted EBITDA. These growth numbers are well over what peers have been able to deliver, which, in our view, is a documentation of the strength of LINK's local approach. Our local teams are working the market, growing the number of use cases in each country, and we are increasing our market share. The fourth quarter reports high performance with an organic gross profit growth of 8% on top of high comparable same period last year. Adjusted EBITDA growth is reported organically at 12%. The quarter is a continuation of the solid performance the company has reported over the last 7 to 8 quarters. In the current quarter, gross profit growth is significantly higher than revenue growth. Gross profit growth is driven by more activity on higher-value clients and advanced products with higher margins. Revenue growth in the current quarter is impacted by softer development on low-margin traffic, partly caused by high comparables in the Global Messaging segment, but also on certain high-volume, low-margin enterprise clients. The profitability contribution on the more advanced products have contracted the softer development on the low-margin traffic on gross profit, but not to the same extent on revenue, thereby resulting in a higher gross profit growth than revenue growth. The enterprise segment is reporting a revenue growth of NOK 50 million. Revenue in Global Messaging has declined NOK 78 million due to LINK terminating traffic to lower-margin destination, focusing on more profitable arrangements. The aggregator business in Global Messaging is more volatile and less sticky compared to the enterprise regions. Volumes fluctuate based on decisions on the LINK side as well as clients' needs and adaptions. LINK has terminated several low-margin destinations, reduced revenue growth, but still increasing gross profit growth and gross margin in the segment. Gross profit is reported at NOK 436 million or an organic growth of 8% in fixed currency, which is in line with the expectations of high single-digit gross profit growth. Adjusted EBITDA is reported at NOK 213 million or an organic growth of 12% in fixed currency, higher than gross profit growth due to LINK's scalable business model. LINK also generated high net operating cash flows of NOK 166 million. LINK has invested significant resources over the last years to have a superior product offering on RCS, combining the channel with AI-driven chatbots and template managers and builders to automate and support client communications and campaigns. Juniper has recently rewarded LINK with the Platinum Award for the best RCS solution in Europe. Gross profit is reported at NOK 436 million or a growth of 8% in fixed currency. A solid contribution from the more advanced CPaaS solutions with higher margins, together with strong growth momentum on high-margin clients and traffic was the main driver of the growth. Q4 is a retail-heavy quarter, and we observed strong interest for many clients to perform more advanced mobile marketing campaigns on richer channels like RCS in combination with chatbots. This effect is also evident in the organic margins with a 2.1 percentage points increase in gross profit margins. The graph at the bottom of the slide displays the margin impact from the segments. Both the enterprise segment and Global Messaging is reporting an increase in margins with approximately 1 percentage points each. LINK's revenue churn has historically been low, normally between 1% to 2% of revenue. Last quarter, the churn was extraordinarily impacted by terminating clients in Global Messaging with minimal effect on gross profit growth. In the current quarter, the churn on Global Messaging has returned to a normalized level, and the revenue decline on this segment is a result of terminating traffic to low-margin destinations on existing clients. Enterprise churn is reported at 2.2%, similar trends as observed in the third quarter. The enterprise churn was impacted by a bankrupt retail client in Western Europe, increasing the churn with plus 0.2 percentage points. Net retention in the current quarter is a less relevant KPI due to a stronger growth momentum on higher-value clients and products and a softer growth on low-margin revenue, resulting in solid gross profit growth, while the revenue development is more stable. The softer growth on low-margin revenue is partly explained by high comparables same period last year and the refocus on profitability in Global Messaging, terminating high volume but very low-margin traffic. Net retention is expected to normalize after Q2 2025. With normalizing, the company is expecting a net retention rate more in line with gross profit growth, excluding the impact from new clients. LINK has significant improvement in new business wins over the last 2 years based on the renewed focus and changes in commercial execution. The graph on the bottom left shows the estimated annualized gross profit on new contracts. The numbers are extracted from our CRM systems and the estimations are based on contractual arrangements and specific dialogue with clients. Internally in LINK, we have a target of achieving NOK 40 million plus in gross profit from new contracts per quarter, except Q3, which will be lower due to summer vacation. The current quarter resulted in NOK 38 million in expected gross profit from new contracts, isolating new contracts for the advanced conversational products named CPaaS in the graph. The current quarter is at NOK 14 million on estimated gross profit. We observed more traction and market demand on advanced mobile marketing solutions combined with bots and WhatsApp, RCS. We also see more demand for marketing automations and CDP in the Nordics. The OTT channels are in high demand. RCS and WhatsApp combined with chatbots and other software solutions are growing rapidly. The main use cases are mobile marketing and customer support use cases. LINK is further enhancing its SaaS solutions with AI content creation to help our clients to automate more of their campaign activity. Historically, about 75% of the gross profit is recorded in the P&L after 12 months. We expect the higher contract backlog to benefit gross profit growth gradually. The more advanced CPaaS contracts take longer to scale volumes versus legacy products, but of course, results in immediate and higher license revenue. LINK has a healthy sales pipeline in addition to new agreements won. RCS is a feature-rich channel that we expect significant growth from moving forward. RCS can be viewed as SMS version 2 as the channel is embedded in the SMS app, but with all the functionality and features we used on, for example, WhatsApp or iMessage. RCS has been on the market for several years, but until now only been available or compatible on selected Android handsets. Apple has not opened up for RCS until now. This has held back the adoption significantly. Apple launched RCS on iOS 18.1 and are gradually rolling out this feature through mobile operators in Europe. Spain, France, U.K., Belgium and Germany offer RCS on both iOS and Android. The rest of the countries are waiting for iOS to be rolled out. Customer demand is driven by the additional value this channel is creating through a better end user experience and interaction. We see higher response rates, engagement and significantly better conversion on RCS than SMS. We expect material commercial traction on RCS when we can reach all end users with the increased security, features and ease of engaging into conversational dialogue. RCS is rapidly growing as we speak, but we expect this growth to accelerate when the channel is available for most end users. LINK has made significant investments in RCS as a channel and developed software solutions on top of the channel. The state-of-the-art product offering has been recognized by Juniper as the best RCS business messaging solution in Europe. Specifically, LINK's AI bots and software solutions supporting and automating client campaigns on RCS, together with our exceptional customer support has been highlighted by Juniper as unique in the industry. RCS is getting traction in the Nordics also. Two large Nordic brands have started utilizing RCS for customer dialogue with tremendous results. RCS through the channels rich feature set is enabling increased customer value through higher sales conversion, click-through rates and end user engagement. LINK's state-of-the-art RCS product offering will secure the company a leading position in this rapidly growing market. In addition to organic growth opportunities, the company is well positioned for inorganic growth through M&A. LINK has the competency, the historical track record for value creation through M&A and a solid pipeline with M&A targets. Since 2015, LINK has closed over 30 acquisitions, of which the majority have been a great success, generating significant value. In 2024, LINK has closed 3 acquisitions: EZ4U in Portugal, NRS in Spain and Reach Interactive in U.K. and more is expected to come. All of these 3 acquisitions had a multiple of between 6x to 7x cash EBITDA and was highly accretive to LINK's own valuation. We have 11 prioritized targets. Most of them are located in Europe. These prioritized targets have an EBITDA target of up to EUR 30 million to EUR 40 million. Of these 11 targets, LINK has 4 companies under due diligence as we speak. In Q4, target in due diligence process was dropped due to our findings and has been replaced by another opportunity. Bolt-ons in Europe have priority, but we're also looking outside Europe. Private companies in our space have a target valuation of between 6 to 8x cash EBITDA before synergies. The quality of the customer base, growth momentum of the targets and synergy potential are the main criteria, placing the valuation in the mentioned range of 6 to 8x cash EBITDA. The company is pointing to LINK's stable historical performance to provide further guidance on reasonable expectations going forward. We expect LINK's European business to continue to display a high single-digit gross profit growth rate. Additionally, we expect the adjusted EBITDA growth rate to be higher than the gross profit due to our scalable business model. Inorganically, LINK has a growth target of 10% on adjusted EBITDA through bolt-on acquisitions. LINK has NOK 2.5 billion in cash reserves. The cash position will be further strengthened by time as the company historically generates approximately NOK 400 million in free cash flow on a yearly basis. The high cash reserves will be used for acquisitions and a significant repayment of the existing bond when the last tranche of the bond will be refinanced in 2025. Acquisitions will not increase net debt beyond a leverage ratio of between 2.0 to 2.5. That was my part of the presentation. Morten, please take over to guide us through the financial section.

Thank you, Thomas. LINK reports quarterly revenue of more than NOK 1.8 billion. Revenue growth was, as in the third quarter, impacted by termination of low-value traffic in the Global Messaging segment. While in Q3 '23, we observed high comparables on high volume, low-margin clients, leading to a slight organic revenue decline in stable currency of 2%, taking into account positive currency effects of NOK 22 million in the quarter. Acquisitions closed this year contributed with NOK 58 million and total reported revenue growth was 3% in the quarter. Zooming in on the organic revenue development, enterprise revenue growth was 4%, with Central Europe contributing significantly to the total growth of NOK 50 million with healthy growth on both domestic and global clients. And organic revenue growth in the region was 13%. Northern Europe delivered low-digit growth in line with previous quarters and was negatively impacted by 3 percentage points from the internal shift of global clients to Central Europe. Western Europe remained fairly stable due to high comparables, mainly on high volume and low-margin clients. The Global Messaging segment reported revenues of nearly NOK 380 million or an organic decline of 17%, impacted by termination of low-value traffic as in line with the previous quarter from refocus towards higher value traffic mix and reduced credit risk. Total volume reported for the quarter was close to 6 billion messages, representing a reported growth of 24% and impacted by adding on significant volumes from the LatAm business part of the acquisition of Net Real Solutions in Spain. Organic volume growth on SMS was as for revenue impacted by termination of traffic and high comparable low-margin traffic, while other messaging, including OTT channels, continued to grow with solid growth momentum organically at 30%. Moving over to the next slide on gross profit. Gross profit is reported at NOK 436 million or a reported growth of 13% with a positive impact from currency of NOK 5 million and acquisitions adding on NOK 16 million. Organic growth in stable currency was 8% and outpacing revenue growth from shift towards higher value revenue compared to the same quarter last year. We are pleased to deliver a strong last quarter of 2024 with gross profit growth in line with expectations and concluding the year with double-digit organic gross profit growth. The enterprise gross profit growth improved quarter-over-quarter by 2 percentage points to 8% and outpacing revenue growth of 4% from improved revenue mix towards both higher-value traffic and products. In terms of regional contribution, Northern Europe delivered an underlying gross profit growth of 3% adjusted for the internal shift of global clients to Central Europe. The underlying growth momentum is soft on existing clients, influenced by price increases from operators over the last few years, while new contracts contribute positively. Central Europe contributed positively to total growth from both top line growth, but also an improved contribution from more advanced products on selected global clients, leading to a reported organic growth of 23% in the quarter, including approximately 2 percentage point growth from the internal shift of clients from the Nordics. Western Europe delivered organic growth in line with the previous quarter of 2%, impacted by both the isolated bankruptcy churn of a large retail client since last quarter and high comparable same quarter last year. In the quarter, the disputed operator price increase in Italy was resolved, resulting in a full reversal of the accrued COGS last quarter of NOK 3 million. Higher interest in and increased use of richer OTT channels contributed positively in a retail peak quarter, but was partly offset by the isolated retail churn, which included a high OTT share. The lower graph shows development in the gross margin level in the enterprise segment, which improved year-over-year and quarter-over-quarter to 27%. The mix towards higher-margin revenue in traffic and products impacted enterprise margin positively, while the reversal of accruals related to the disputed operator price increase had a 0.2 percentage points impact on the margin year-over-year. Then to the next slide on adjusted EBITDA. Adjusted EBITDA is reported at NOK 213 million, a reported growth of 18% and 12% or NOK 22 million organic growth in stable currency. Growth is driven by NOK 30 million organic gross profit growth and partly offset by an organic OpEx growth of 4% or NOK 8 million in the quarter. The increase in operating expenses was mainly driven by salary inflation and growth-related items. The inorganic growth contribution from acquisitions closed in 2024 was NOK 9 million in the quarter. Adjusted EBITDA margin improved year-over-year by 1.5 percentage points, driven by the expansion in gross margin, partly offset by increased OpEx to sales ratio linked to revenue decline from low-margin traffic. In the lower graph, we have bridged the effects from nonrecurring costs between adjusted EBITDA and EBITDA in the fourth quarter. In total, we recognized nonrecurring costs of NOK 51 million in the quarter. Costs related to share option was reported at NOK 8 million and includes outstanding incentive programs and employee share option programs with a declining cost recognition as programs approach maturity. M&A costs were NOK 21 million in the quarter and whereof NOK 15 million was related to closed acquisitions, while the residual is related to ongoing processes, including the ongoing due diligence processes on 4 prioritized targets. Other nonrecurring costs was related to restructuring costs related to severance agreements of NOK 5 million. Unfortunately, we experienced a successful phishing attempt in one of our subsidiaries despite high focus on awareness and training on this topic. The amount assumed lost in relation to the incident is NOK 18 million and an insurance claim is ongoing and still pending conclusion. Moving over to the P&L. I will only focus on selected few items as we have been through development in adjusted EBITDA, and I have explained the nonrecurring cost in the quarter. The cost of depreciation and amortization is reported at NOK 82 million, a NOK 9 million decrease related to a onetime catch-up in D&A in the fourth quarter of 2023. D&A related to acquisitions added was NOK 3 million, which together with currency effect was fully offset by a decline in D&A on our own development projects and right-of-use assets. Net financial items are reported at negative NOK 27 million and includes a net currency gain of NOK 14 million recognized in relation with revaluation of the earn-out from Message Broadcast divestment of NOK 50 million, partly offset by a small net other currency loss of NOK 1 million. Net interest cost reported at NOK 25 million includes NOK 27 million in bond interest costs, NOK 10 million in amortized transaction costs, whereof NOK 6 million is an early recognition due to the partial refinancing of LINK01 bond ahead of maturity. Interest and transaction cost was partly offset by net interest from cash deposits totaling NOK 12 million in the quarter. Then to the balance sheet. Noncurrent assets amount to NOK 6.6 billion, whereof NOK 4.7 billion in goodwill. The year-on-year increase of NOK 260 million is mainly driven by acquisitions closed in 2024, contributing NOK 200 million, while the remaining increase is related to currency effects. The decline in noncurrent assets from the third quarter of NOK 860 million was mainly driven by cancellation of the EUR 74 million own bonds held in October 2024 in relation to the partial refinancing of the LINK01 bond. Trade and other receivables were reported at NOK 1.6 billion and include the sellers' credit and earn-out related to the divestment of Message Broadcast totaling NOK 286 million, which is due in the second quarter this year, which is the main driver for the increase together with currency adjustments of NOK 48 million and NOK 32 million related to acquisitions. Underlying development was positive following termination of low-value traffic and improved collections. Cash reserves were reported at NOK 2.5 billion and expanded year-over-year, mainly from contribution from the U.S. divestment with NOK 2.2 billion received in the first quarter 2024. Cash generated from operations and partly offset by buyback programs for own bonds and shares as well as closed acquisitions. During the quarter, LINK acquired own shares worth NOK 36 million and concluded the share buyback program, while the consideration net of cash paid for Reach Data acquisition in the U.K. was NOK 37 million. The cash outflow impact of the partial refinancing was NOK 33 million in the quarter related to call premium and transaction fees. Reported payables was close to NOK 1.5 billion a slight decline year-over-year with contribution from acquisitions adding NOK 14 million and currency effects adding another NOK 55 million, underlying decrease reflecting normal fluctuation in timing of payments mainly to mobile operators. Net interest-bearing debt is reported at NOK 994 million, calculated in accordance with our bond agreement with gross debt related to the 2 outstanding bonds totaling EUR 296 million. The remaining EUR 171 million LINK01 bond matures December this year and is reclassified to short-term borrowings from this quarter and is expected to be refinanced at a lower level in due time. Quarter-over-quarter, net debt was marginally up despite extraordinary cash outflows of more than NOK 100 million related to the acquisition of Reach Data, share repurchase and refinancing-related cash outflows, which was offset by the strong operational cash flow. Leverage end of 2024 was reported at 1.3x LTM pro forma adjusted EBITDA or slightly down from the previous quarter. The receivables, sellers’ credit and earn-out related to the divestment of Message Broadcast during second quarter totaling NOK 286 million is not deducted in the net debt calculation according to bond terms. Including these receivables, leverage would be at 1x LTM pro forma adjusted EBITDA end of 2024. Further to the last slide and an overview of key operational cash flow items. In the quarter, we report a strong cash flow from operations of NOK 166 million or close to 80% of adjusted EBITDA with a slight positive net impact from interest received and other working capital items in the quarter. CapEx was reported at NOK 41 million with the impact of NOK 3 million related to acquisitions closed during 2024. Second half CapEx was somewhat elevated compared to first half as selected CPaaS solutions have been fast tracked to secure closing of customer contracts. Interest payments at a lower level than normal due to the cancellation of own bonds held totaling EUR 74 million and refinancing EUR 125 million of LINK02 into the LINK02 bond, which have quarterly interest payments compared to biannual in LINK01 and hence, approximately NOK 50 million in interest paid have been shifted to first quarter 2025. On an LTM basis, free cash flow after CapEx and interest paid was close to NOK 400 million. Following the partial refinancing, we still reiterate that the financial policy remains of net debt not exceeding 2 to 2.5x LTM pro forma adjusted EBITDA, which still gives ample room for executing on the inorganic growth strategy. That completes the financial section. Now we open up for Q&A. Please post questions online.

Okay. We received some questions. We'll start off with some questions from [ Øystein ] in ABG. The first one, was there some specific reason for the lower GP from new contract wins year-on-year or just normal fluctuations in contract sizes?

No, there were no specific reasons for it being slightly lower than the target of NOK 40 million. It was more, as [ Øystein ] mentioning, normal fluctuation basically.

Second one, do you see potential for larger level of acquisitions in Europe? Or would you need to go outside Europe to do larger M&A?

We do see opportunities for level of acquisitions in Europe, but that doesn't necessarily mean that they're only in Europe. The company can be located outside Europe and also have a significant footprint in Europe. So, there are still opportunities for M&A in Europe.

We'll move to some questions from Kristian Spetalen in Arctic. The first one on the specific fishing incident in Q4 is NOK 80 million, the maximum loss or could there be more? I can take that one. That is the MAX exposure that we have recognized. There is no further exposure on that incident. The second question from Kristian is, can LINK do anything to mitigate operator price increases?

Normally LINK always transfers mobile operator price increases to our customers. That is mirrored in our customer agreements. We, of course, do what we can to avoid mobile operator price increases in advance, if possible. It varies from country to country. In some markets, we have a better opportunity to avoid mobile operator price increases, like in Italy, for example, where we negotiated with the Italian mobile operator and got a much more favorable outcome than what the mobile operator initially flagged.

And third one from Kristian is given the higher share of CPaaS in new contracts, does this imply a higher risk of growth materializing given that RCS only has partial support across Europe?

We've been fairly restrictive when we estimate the gross profit from the CPaaS contracts. In many instances, we only include license fees. If we could volumes, it's because we have very specific guidance from the customers. So, I don't think necessarily the risk profile is higher, but we do see that it takes a little bit longer to scale those contracts. So, it might take LINK longer to sort of get the full gross profit potential in the P&L.

And we'll take some follow-up from [ Øystein ] in ABG. Have you seen any changes in the competition for M&A targets?

No. We haven't seen any changes in the competition. It's more or less only LINK, which is interested in acquiring companies in our industry right now. And we haven't seen a change on that.

And the last one from Oystein. So far are there anything special in the comparable numbers for H1 2025? Or should we expect growth in line with your guidance of high single-digit organic growth? I can maybe comment on that. When it comes to sort of the gross -- we focus on gross profit. First half was fairly normal quarters for us. As we presented on net retention, we expect that to sort of normalize after Q2 once we sort of faded out the strong comparables on this low-margin, high-volume clients and the termination of traffic in Global Messaging. Then we'll move to some follow-ups from -- Kristian had a follow-up. EBITDA contribution from acquired companies is similar to LINK's recognized M&A expense. How do you weigh the benefits from smaller bolt-on acquisition versus the M&A expense and M&A activity taking some management focus away from organic growth?

Yes, I can start with the last part of the question, and maybe you, Morten, you can go into the details on M&A expenses and the EBITDA contribution from the acquired targets. The benefits from smaller bolt-on acquisitions -- they're quite large actually. And it doesn't take away the focus of top management at least. I am, of course, involved in reviewing the bolt-on opportunities that we are having and which we want to acquire and want to pay for them. But when you look at the onboarding, it's by local management in Spain or in U.K. So that is happening quite efficiently. And also, the bolt-ons, they give us more capacity in a certain country. We get more resources, more people, more customers and more opportunities to find growth.

Yes. As I alluded to in my section, about NOK 15 million is related to closed opportunities. Fair share of that is coming from what we closed this year. There are also some runoff costs on the projects and some related to the broadcast divestment, which are also booked in the fourth quarter, while NOK 5 million is related to ongoing processes and especially the 4 targets, which are in a due diligence stage. Then we have some other questions from other listeners. There's a question here. How will AI influence on your business?

Yes. AI, we have already introduced AI into our products. The chatbot solution is combined with AI, and we are selling that. So, this is sort of in the beginning phase, of course, of the product. And it's only the sort of more first movers who are interested in experimenting with these kinds of solutions. And as I said, we are also now working on AI when it comes to the content generation of the more complex campaigns and communications. So, AI is something we're working on.

There's a follow-up. And when will you be able to pay dividends?

The bond agreement from 2020 prohibits us from paying dividends. When that is being refinanced, the company will give some more clarifications on our intentions regarding that topic. That is expected to happen later on in 2025.

Yes. I can just comment that there's a limitation there in the LINK01 bond agreement. LINK02, there is more room for dividend or gives more dividend capacity basically. So, as Thomas said, once we refinanced the last year of LINK01, we will come back with an update on dividend policy. And some other questions. Congrats on yet another solid quarter. Clearly, the company has ample flexibility to address the final outstanding on the bond issue in December this year. How should we think about the company's cash position and liquidity beyond 2025? What is a reasonable long-term liquidity position? And is a revolving facility not a better option having so much cash on the balance sheet?

Yes. I agree. We have too much cash on the balance sheet right now. This is not necessarily something we were aiming for. It was a result of the disposal of Message Broadcast in January 2024. When we do refinance the bond, we have said that we expect a larger sum also to be down paid on the outstanding LINK01 bond. And after the refinancing, we will, of course, have much less liquidity in our bank deposits. The long-term liquidity need of the company when you exclude M&A is around NOK 400 million, NOK 500 million. And then sort of we will get back to how we want to sort of add flexibility for acquisitions. That can be done with a smaller sum on the bank statements or it can be done through an RCF. That's something we will get back.

Yes. Then there's a question from Olav in Pareto Securities. Do you have an update on the operator price dispute from Q3? Yes, as we mentioned earlier today, and also writing that in the report, we have come to an agreement, as Thomas said, with the operator after negotiations, and we have fully reversed the additional accrual of around NOK 3 million that we recognized in the third quarter. So that is reversed in the fourth quarter financials as reported. Then there, let's see if there are some additional questions coming in. Yes. Then there is a question from Oliver Pisani in Carnegie. Could you comment on the operating momentum so far in the first quarter?

Yes. Basically, sort of we have given a range for what to expect in 2025, and we wouldn't have given that range if we saw a deviating development or expected a deviating development in Q1. So, it's in line with the high single-digit gross profit growth and a higher EBITDA growth than gross profit growth.

Yes. Then there's a question on M&A. Is there any plan to expand the M&A pipeline? Or will the existing prospects be closed first?

No. We are shifting targets in the pipeline as we see progress are made or not made, especially if the progress is not made, then sort of we can exclude one target that was prioritized and add another one. So from time to time, there are changes in the pipeline based on the development.

Yes. Then there is a couple of questions from Vinay Bhardwaj in Cantor. First one is within your own internal forecast for gross profit growth this year, what are some of the key factors or trends that you're watching, which would either result in you achieving the upper end or the lower end of your organic profit growth target? Yes. I think sort of how we see the market now, the market is developing positively. There is a growth in the market as we see from how sort of the penetration and adoption rates are developing. When it comes to RCS, we are a bit more prudent there internally when it comes to how fast this will be rolled out but we are ready and we have the products ready to serve the clients on RCS as we're doing in some markets. We also see some traction in the Nordics, which is basically new to RCS, but we don't have the full reach to deliver RCS. So we believe as long as the market remains fairly normalized, we don't see huge downside to delivering on our growth ambitions. But of course, we need to deliver on sales and get the contracts into the P&L. There are some -- let's see if we have some follow-ups now. Yes. There's another one from Vinay. One of your competitors reported today with some quite positive commentary on RCS market. Can you give a sense of what percent of your traffic currently comes from RCS? That is fairly limited. It's a small share of the NOK 6 billion that we're sending in the quarter, but it has a healthy margin. So it is contributing positively to the gross profit growth. That was the questions we had so far. Let's give it some seconds to see if there are some follow-ups. No. I think that was all the questions. Thank you for listening in, and we'll speak next quarter. Bye-bye.